Restaurants Are Dangling Vacation And Matching 401(k), But Many Workers Aren't Biting

At the Wheat Penny Oven and Bar in Dayton, Ohio, demand for pizza and craft cocktails has never been stronger, but staffing shortages have temporarily forced the restaurant to close on Sundays and Mondays.

"Not everybody wanted to come back," says co-owner Liz Valenti. "People that had been in this industry for five, 10, 15 years, made the decision not to come back to hospitality. They've moved on to other areas."

Restaurants and bars have hired hundreds of thousands of cooks and servers in recent months to meet surging demand, but the industry as a whole is still short of workers.

At Wheat Penny, sales have topped pre-pandemic levels, but they would probably be higher still if Valenti could find enough workers to operate seven days a week.

"Customers, since the vaccination has kicked in, they've been much more eager to spend dollars, and we've benefited from that," Valenti says.

Factories, delivery services and construction crews are also clamoring for additional help to keep pace with booming demand from consumers.

The Labor Department reported Friday that U.S. employers added 943,000 jobs in July. That's up slightly from June, when revised figures show employers added 938,000 jobs. The unemployment rate fell to 5.4% in July, from 5.9% the month before.

Restaurants and bars accounted for a quarter of the jobs added last month. But employment in the broader hospitality industry is still about 1.7 million jobs short of its pre-pandemic level.

The report shows schools added 261,000 jobs in July, but that number may be exaggerated by seasonal adjustments. The pandemic has altered school hiring schedules this year.

Even though millions of Americans are still unemployed, businesses say they're having to search harder to find workers.

"We saw a huge increase in the number of job postings offering signing bonuses, and advertising that starting salaries were $15" an hour, says Julia Pollak, a labor economist with the job-search website ZipRecruiter.

Average hourly wages in the hospitality industry were 9.6% higher in July than they were a year ago. Some big public restaurant companies, such as The Cheesecake Factory and Chipotle, say they've been able to staff up successfully since raising wages, but many firms are still struggling.

Valenti has raised pay for her line cooks from $13 to $15 an hour, and she's also touting fringe benefits not usually associated with restaurants.

"There's paid vacation," she says. "There's health insurance that we underwrite. There's a 401(k) match. So we really are trying trying to get people to see that they have the capacity to earn a good living here as well as to have a good quality of life."

Some would-be employees are waiting for schools to reopen or for more people to get vaccinated before going back to work. And the surge of new coronavirus infections tied to the delta variant may cloud the economic outlook going forward.

"Some people might say, 'You know what? I'm just going to wait a couple of months before going back to work,' " Federal Reserve Chairman Jerome Powell told reporters last week. "It may be that the effect is to slow the economy down just for a period of months."

The worsening health outlook has prompted some companies to postpone their plans for a return to in-person workspaces. Amazon, for example, says office employees won't return to corporate campuses until early next year. That's a potential setback for nearby businesses that rely on office foot traffic.

"As people were returning to offices, they were of course returning to the restaurants and nail salons and dry cleaners around their offices," says Pollak "That was reviving employment in downtown. That may now be on pause for the next couple of months."

The jump in infections could also weigh on the travel and in-person entertainment industries, which were just beginning to find their footing.

At Valenti's restaurant in Ohio, servers have voluntarily started wearing masks again, just 10 days after shedding the face coverings. The restaurant is not asking customers to mask up yet, but that could change.

"Governor [Mike] DeWine has made it clear he is not going to make a mandate again," Valenti says. "So I think it's going to be on the shoulders of independent businesses to make that hard call. And it's unfortunate that it's going to be a young person at a host stand that is going to possibly have to ask someone to put a mask back on. That's a really unfortunate situation."

Most customers are understanding, Valenti says. But it adds yet one more potential difficulty for restaurants like hers: The prospect of having to deal with hostile customers who don't want to wear a mask will likely not make recruiting any easier.